Howe founded the 'Women's Deposit Company' in 1879, which accepted deposits only from single women. She gained confidence by telling depositors that the bank worked with a charity called Quaker, which helps women.
Recently, there is a word we frequently encounter in daily life along with fraud: Ponzi. Ponzi, a pyramid system designed to enrich those at the top, takes its name from the Italian fraudster Charles Ponzi. Ponzi is not the first to implement the system. The first person to apply this system was S Emily Howe, a fortune teller in the USA 145 years ago...
Howe founded the 'Women's Deposit Company' in 1879, which accepted deposits only from single women. She gained confidence by telling depositors that the bank worked with a charity called Quaker, which helps women.
Sarah Emily Howe (c. 1826 – January 26, 1892) was an American fraudster who operated several Ponzi schemes in the 1870s and 1880s,[a] most famously the Ladies' Deposit Company of Boston. Howe was arrested in 1880 and imprisoned for three years for fraud, but upon her release she repeated similar frauds until she was arrested again in 1888.
She initially promised high-interest rates of 2 percent per week and 8 percent per month to women who deposited their money. There was no such charity! Howe was relying on funds to be deposited into newly opened accounts to pay interest on old deposits. Although Howe did not advertise the bank he founded, he managed to collect $500 thousand from approximately 1,200 women. In 1880, a newspaper started making news about the Women's Deposits as a fraudulent system.
This news caused those who had deposited money with Howe to rush into the bank, and the plan collapsed. Howe was charged with multiple frauds and served 3 years in prison. After her release in 1884, Howe founded the 'Women's Bank'. The new bank operated on similar principles to the previous bank, but promised a slightly lower interest rate of 7 percent per month. Howe got into trouble again for fraud and was forced to flee Boston in 1887. Unable to continue the system, Howe tried to make a living by fortune telling. A Ponzi system is defined as a fraudulent investment scheme.
When participation in the Ponzi system ends, new investors cannot be paid because there is no profit-making production and the system suddenly collapses. This method takes its name from Italian immigrant Charles Ponzi, who practiced it in the USA in the 1920s. Ponzi buys a printing house and starts printing an international export-import magazine and sends news all over the world.
He aims to turn the corner with the advertisements he will collect in the magazine. Meanwhile, a letter comes from Spain and it is stated that they are interested in the magazine. The postage stamp placed in the envelope attracts Ponzi's attention. This postage stamp is an international stamp that is placed in the envelope as a courtesy to avoid tiring the other party.
Ponzi realizes that the value of this stamp is 10 percent more in the USA. Ponzi immediately puts the plan into action and gets the profit he expects, but more capital is needed. From now on, everything started in the early 1920s, when Ponzi hung a piece of paper on the window of his shop: "Make 50 percent profit in 45 days, 100 percent profit in 90 days!" Curious investors immediately rush to Ponzi's shop and are fascinated by his impressive style.
Ponzi makes investors believe that profits can be made by using postage stamps. Ponzi's method suddenly becomes famous when low-budget investors join the system and get their money back with interest on the promised day. As the number of winners increases, demand increases. Ponzi is forced to open new branches and collects approximately 15 million dollars from 40 thousand people in a short time. In the 1920s, discussions about the illegality of Ponzi's activities began to be reported in the Boston Post newspaper.
The newspaper also makes headlines about Ponzi's previous corruption. Ponzi's scam is revealed when investors want to get their money back. Ponzi was able to pay back only 10 percent of its investors. He was arrested when he could not pay the remaining $5 million. Even though he tried to commit similar crimes a few more times after he was released from prison, he could never achieve his former success (!). Ponzi died poor and forgotten in Brazil in 1949...